Apple joins President Obama's 'SupplierPay' initiative aimed at boosting U.S. small business

Posted:
in General Discussion edited July 2014
The Obama administration announced on Friday that Apple is one of a number of U.S. corporations -- including Coca-Cola and IBM -- that have agreed to pay smaller component suppliers more quickly in an effort to increase cash flow throughout the supply chain.




Dubbed "SupplierPay," the new program is a private-sector extension of QuickPay, a federal initiative designed to ensure that small contractors are paid within 15 days of submitting an invoice. This enhanced cash flow helps small businesses avoid the need to borrow money, the government says, increasing their chances to prosper.

"For the larger companies, joining SupplierPay demonstrates a recognition that a healthy supply chain is good for business," the White House said in a release. "For the small business suppliers, benefiting from SupplierPay means having more capital to invest in new opportunities, new equipment, and new hiring."

According to the White House, companies often take as long as two months to pay their suppliers. This restricts the smaller firms' ability to make capital investments or even pay subcontractors without accessing credit, where debt service obligations can make it yet more difficult to operate.

Apple has long been seen as an advocate for supply chain responsibility, releasing an annual report on the subject that details its efforts to enforce its Supplier Code of Conduct throughout its hundreds of contractors.

Though much of the company's attention is focused on issues like child labor and conflict minerals in developing nations, it has also worked to address labor problems at home. Apple's all-new Mac Pro is manufactured at a facility in Texas, for instance, not far from a Samsung-owned plant that fabricates A-series processors for iOS devices.
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Comments

  • Reply 1 of 99
    Jack Tramiel would be screaming if he were still alive.
  • Reply 2 of 99

    Glad to hear this piece of good news. On the other hand, companies like Amazon, not a small company, can take 90 days to pay. May guess, based on the way they have been behaving, is they would like to not pay at all.

  • Reply 3 of 99
    SpamSandwichSpamSandwich Posts: 31,094member
    Good lord. Apple needs to be a bit more aware that there is "not a lot of love left" for this president, this administration and anything to do with Washington right now.

    They need to not be so closely tied to an administration that has so many negatives associated with them.

    In addition, any perception that Apple is receiving "marching orders" from Washington is distasteful and will tarnish their image somewhat. Why even invite such associations?
  • Reply 4 of 99
    pmzpmz Posts: 3,433member
    Apple has always failed us in their unwavering devotion to mainstream politics. Nothing has changed under Tim Cook.

    FFS, Al Gore of all people is (still?) on the board. He should be in an institution.
  • Reply 5 of 99
    rogifanrogifan Posts: 10,669member
    Good lord. Apple needs to be a bit more aware that there is "not a lot of love left" for this president, this administration and anything to do with Washington right now.

    They need to not be so closely tied to an administration that has so many negatives associated with them.

    In addition, any perception that Apple is receiving "marching orders" from Washington is distasteful and will tarnish their image somewhat. Why even invite such associations?
    This. Regardless of ones politics this gives the impression that when the government says "jump" Apple says "how high?". Is Apple a company known for not paying suppliers quickly enough? Why isn't Amazon at this meeting?
  • Reply 6 of 99
    john.bjohn.b Posts: 2,720member

    I've been out of accounting for many years now, but this is all addressed in the credit agreement between companies.

     

    Generally, terms for a company with an adequate credit rating would be "Net 30" which means payment is due 30 days after invoicing.  The other thing that used to be popular was "2% 10, Net 30" terms which would provide a discount as incentive for early payment.  I worked for a company where we streamlined our payment processing to take advantage of 2% 15, Net 45 terms because we felt like the discount at that time was worth more to our bottom line than the additional access to the cash flow.

     

    I guess the deal here is that Apple, IBM, Coca-Cola, the US Govt., etc. are big enough to basically dictate credit terms to small suppliers, but that is actually factored into cash flow projections for large companies.

     

    I'm not sure how this is going to change standard net payment terms for other companies unless it's designed to set an example, but business people tend to make full use of whatever terms they are given.  Even though electronic payments and verified payment processing could shorten payment cycles, the finance and accounting types have become accustomed to holding that cash for cash flow purposes.  I don't think you are going to be able to use this to "shame" your typical Fortune 500 company into faster payment processing based solely on the size of the supplier.  I could be wrong, but I don't think I am.

  • Reply 7 of 99
    crowleycrowley Posts: 5,826member
    Quote:
    Originally Posted by Rogifan View Post





    This. Regardless of ones politics this gives the impression that when the government says "jump" Apple says "how high?".

    Really?  I'd say it gives an impression that Apple are engaged and willing to sacrifice their own margins to support the broader market.  That's responsibility, not weakness.

  • Reply 8 of 99
    Quote:

    Originally Posted by pmz View Post



    Apple has always failed us in their unwavering devotion to mainstream politics. Nothing has changed under Tim Cook.



    FFS, Al Gore of all people is (still?) on the board. He should be in an institution.

    I have never understand the venom people have with Al Gore being on Apple's board of directors. Would you please enlighten me to why you do not like the man?

  • Reply 9 of 99
    rogifanrogifan Posts: 10,669member
    crowley wrote: »
    Really?  I'd say it gives an impression that Apple are engaged and willing to sacrifice their own margins to support the broader market.  That's responsibility, not weakness.
    If this is good for the broader market businesses shouldn't need a government law or White House summit to implement it. The optics of this to me is Apple taking orders from the Obama administration. IMO those aren't good optics.
  • Reply 10 of 99
    crowleycrowley Posts: 5,826member
    Quote:

    Originally Posted by Rogifan View Post





    If this is good for the broader market businesses shouldn't need a government law or White House summit to implement it.

    Why not?  Markets can be wrong, markets can be self-destructive and markets can fail.  So can government and regulation of course, neither are perfect.

  • Reply 11 of 99
    mpantonempantone Posts: 1,378member
    Quote:
    Originally Posted by Rogifan View Post



    This. Regardless of ones politics this gives the impression that when the government says "jump" Apple says "how high?". Is Apple a company known for not paying suppliers quickly enough? Why isn't Amazon at this meeting?

    You'll need to ask Amazon why they weren't there. It might have something to do with Amazon being small peanuts compared to the other companies invited, mostly Dow 30 Industrial components (Apple is the exception, but then again, they have more market cap than any other company)

     

    This program isn't a punishment; it is a strictly voluntary, Apple was not required to participate. SupplierPay identifies that some of the private sector leaders (a.k.a. "big business") are serious about acknowledging that small businesses help their own, and that they are willing to make an effort in helping the latter thrive by addressing one of the financial challenges typical of smaller businesses (cash flow).

  • Reply 12 of 99
    zoetmbzoetmb Posts: 2,445member
    Quote:

    Originally Posted by Crowley View Post

     

    Really?  I'd say it gives an impression that Apple are engaged and willing to sacrifice their own margins to support the broader market.  That's responsibility, not weakness.


     

    It does not sacrifice margin.   It only sacrifices cash flow and with Apple's hoards of cash, they don't have to borrow money so holding payments back from suppliers doesn't do much for them.

     

    If Apple had decided this on their own, the fanboys would be cheering Apple's responsible stance.   Because this program of encouraging large companies to pay small companies faster was apparently government-driven, suddenly it's bad news because Obama was involved.    Total hypocrisy.  

     

    This is a good idea and should be welcomed no matter whose idea it was.   It helps smaller companies.    And if their deal with the company was that Apple gets to take a discount if it's paid in 10 days, then Apple can actually save money. 

     

    Retailers (both physical and online) also play this game.   They defer paying for the products they buy from wholesalers for as long as possible.   In essence, they really don't want to pay the wholesalers/distributors until they themselves have sold the product and collected the cash.    This is especially true for retail chains.    When Circuit City went out of business, I think they owed Nikon something like $90 million.    You can be assured those weren't just products they had bought in the previous 30 or even 90 days. 

     

    But then retailers have the nerve to automatically take the "net 10" discount anyway.    I can't say I know specifically what terms Amazon has been paying on or what they've been asking for in new contracts, but my general understanding is that they take a long time to pay publishers and manufacturers.   

  • Reply 13 of 99
    kpluckkpluck Posts: 500member

    Completely meaningless.

     

    If Apple really wants to help small business they should apologize for choking off supply of Apple hardware to 3rd party computer stores and pledge availability of Apple hardware equal to that of company owned stores going forward.

     

    -kpluck

  • Reply 14 of 99
    bobringerbobringer Posts: 105member
    This is a good thing... and Apple is a well positioned company to take this principled stance when working with their partners.

    But...

    This has anything to do with the government, because why?
  • Reply 15 of 99
    crowleycrowley Posts: 5,826member
    Quote:

    Originally Posted by bobringer View Post



    This is a good thing... and Apple is a well positioned company to take this principled stance when working with their partners.



    But...



    This has anything to do with the government, because why?

    Point to the industry-led initiative to take the principled stance.  That's why.

  • Reply 16 of 99
    bobringerbobringer Posts: 105member
    Quote:

    Originally Posted by leavingthebigG View Post

     

    I have never understand the venom people have with Al Gore being on Apple's board of directors. Would you please enlighten me to why you do not like the man?


     

    Well... maybe he shouldn't say that people are science hating flat earthers who need to be shunned like racists in the 60's... for no other reason than the fact that they disagree with him on the climate.  Ya think maybe it could have something to do with that?  He contributes to a major problem in this society where anybody with a differing opinion is evil... instead of just someone with a different opinion.  Have you SEEN the internet?  It's full of this.  Our "leaders" should be above those games, which should be left to the fringes and other crazies on the internet.

  • Reply 17 of 99
    apple ][apple ][ Posts: 8,650member

    Apple is a valuable brand, the best brand name in the world.

     

    The Obama brand is one of the worst and most unpopular names in the US currently, and Apple should not be tarnishing their good name by associating with it. 

  • Reply 18 of 99
    apple ][apple ][ Posts: 8,650member
    Quote:

    Originally Posted by bobringer View Post

     

     

    Well... maybe he shouldn't say that people are science hating flat earthers who need to be shunned like racists in the 60's... for no other reason than the fact that they disagree with him on the climate. 


     

    Yes, he's a complete lunatic, a vile person, and should not be on Apple's board. 

  • Reply 19 of 99
    crowleycrowley Posts: 5,826member
    Quote:

    Originally Posted by zoetmb View Post

     

     

    It does not sacrifice margin.   It only sacrifices cash flow and with Apple's hoards of cash, they don't have to borrow money so holding payments back from suppliers doesn't do much for them.


    True enough, thanks for the correction.  I think it probably has a fair impact though.  I seem to remember reading that Apple normally negotiated a 90 day window for paying their subcontractors (no citation, sorry), so taking that down to 15 days is a substantial reduction, which commits their cash when it could be sitting in a high interest-bearing account, or doing something else.

     

    "Fair impact" obviously comes in the context of Apple's many billions of reserves, so I'm sure they'll be fine.

  • Reply 20 of 99
    solipsismxsolipsismx Posts: 19,566member
    Good lord. Apple needs to be a bit more aware that there is "not a lot of love left" for this president, this administration and anything to do with Washington right now.

    They need to not be so closely tied to an administration that has so many negatives associated with them.

    In addition, any perception that Apple is receiving "marching orders" from Washington is distasteful and will tarnish their image somewhat. Why even invite such associations?
    rogifan wrote: »
    If this is good for the broader market businesses shouldn't need a government law or White House summit to implement it. The optics of this to me is Apple taking orders from the Obama administration. IMO those aren't good optics.

    It reads like you two want to Apple to do what John Boehner does and oppose anything Obama says regardless of its merit.
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